- Cue Health founder and investor, Kelly Day, and certain other stockholders
- Calls on the Board to reign in undisciplined expansion and cut expenditures
- Board should include direct stockholder representation to hold management to account
Kelly Day and other concerned stockholders who collectively own 7.5% of Cue Health, Inc. (the “Company” or “Cue Health”) (NASDAQ: HLTH) outstanding stock sent a letter to the board of directors of Cue Health outlining their urgent concerns for the Company.
The full text of the letter follows:
October 6, 2023
Board of Directors
Cue Health, Inc.
4980 Carroll Canyon Rd., Suite 100
San Diego, CA 92121
Members of the Board of Directors (the “Board”):
As you know, I was the founder of Cue Health, Inc. (“Cue Health” or the “Company”) and an investor from the Company’s first seed round, through subsequent rounds of its financing, and together with certain other stockholders of the Company (the “Concerned Stockholders”), own approximately 7.5% of Cue Health’s outstanding stock. We are long time and deeply engaged stockholders of the Company. We have reviewed the letter sent by Tarsadia Investments, LLC to the Company on August 31, 2023, and while we are acting independently and in our own interests, we believe that they raise valid concerns regarding the Company.
Since its founding in 2010, Cue Health has developed game-changing diagnostics to enable lab-quality care at home, work or at the point of care. The Company enjoyed a substantially validating moment when Cue’s COVID-19 test received Emergency Use Authorization from the FDA in June 2020.
However, rather than recognize that the dramatic increase in Covid-related product revenue was temporary, the Board and management team took this as a sign to undertake an undisciplined expansion of the Company’s business outside of its singular area of excellence. Cue Health has entered fields where it has no prior expertise or track record and is attempting to compete with well-funded and well-established competitors.
As a direct consequence, Cue Health’s expenditures have soared, even as its post-Covid revenues have plummeted. Cue Health’s quarterly cash burn is alarming, and unless it is brought under control, we believe it threatens to imperil the Company’s future, or condemns it to seeking a massively dilutive and punitive financing. As stockholders are well aware, the markets have recognized that the Company is on an unsustainable path.
The Concerned Stockholders believe that the Board must take immediate action to stabilize the Company, substantially reduce its cash burn, and focus on its core diagnostic business. We continue to believe that Cue Health’s core technology and diagnostic platform remains the Company’s foremost value creation opportunity and should receive the full attention and resources of the Board and management team.
Cue Health must also remain financially positioned to weather potential regulatory delays and setbacks, without being substantially compromised. We believe that management may be guided by a sense of unwarranted optimism regarding the Company’s future clinical prospects, and as such has disregarded fiscal prudence.
Finally, based on the Company’s performance and decision-making to-date, the Concerned Stockholders believe that the Board is not adequately supervising management and holding it to account. We believe the Board should reflect a greater representation of direct stockholder voices to ensure that it is acting independently of management.
We are also prepared to meet with the independent members of the Board to further discuss our views as soon as possible.
I founded Cue Health because I believed in its vision and potential. The Company’s current course threatens the substantial progress Cue Health has made and risks its key potential value creation opportunity. The Concerned Stockholders urge the Board to heed our voices as long-term stockholders and take action today.
Sincerely,
Kelly Day, on behalf of the Concerned Stockholders
This document contains forward-looking statements. Such statements are sometimes indicated by words such as “expects,” “believes,” “will” and similar expressions. In addition, any statements that refer to targets, expectations, projections or characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Such statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual returns could differ materially and adversely from those expressed or implied in any forward-looking statements as a result of various factors. Certain information included in this material is based on data obtained from sources considered to be reliable. No representation is made with respect to the accuracy or completeness of such data.
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